How Strong Will The Bounce Be?
Stocks are higher in early trading after yesterday's sharp selloff. The culprits for yesterday's decline haven't really gone away, but for now the focus has softened.
China announced price control guidelines, which could take some steam out of the commodity sail. And Ireland's Finance Minister confirmed they are in talks with the EU, ECB, and IMF. But the country remains hesitant to accept aid for its fiscal troubles so far.
Asian markets were mostly lower overnight, with China down another -1.9%. Europe was mixed this morning. The dollar is down a little today, helping gold bounce a little to $1341, while oil slides a bit more to $81.62.
The 10-year yield is down today to 2.81%; and the VIX is giving back -6% to 21.22 after yesterday's sharp spike higher.
Trading comment: Today's bounce looks tepid so far, but it is still early. The market has gotten oversold again, so a bounce should be expected. But I don't expect it to change the near-term trend overnight. I think it is more likely that after the market gets an oversold bounce, that there is another wave down which should produce a better buying opportunity.
The put/call ratios were not has high as I would have liked to see yesterday given the magnitude of the selloff. We need to see investor complacency get shaken up to help the market bottom and continue to climb the wall of worry.
I did a little buying yesterday, as I like to average in. You are never going to time the bottom perfectly, so it is better to put your money to work in stages. I'll wait for another down leg before putting more money to work. Patience.